KRA Commissioner General John Njiraini says the packeted fresh milk does not fall under the category of processed items which should attract the 16 percent VAT.
In a statement on Tuesday, Njiraini said fresh milk does not include additives to make it processed but instead undergoes treatment to make it much safer for consumption.
“For the purpose of the VAT Act, the term “unprocessed milk” shall include milk that has undergone heat treatment to eradicate harmful bacteria but for which no significant value addition has taken place,” he clarified.
He however said the milk which should attract VAT is the one that has additives like flavoured milk, buttermilk, curdled milk, cream, and yoghurt.
“This kind of products contains sugar additives or other similar sweetening matter or either contains fruits, nuts, cocoa or other similar additives,” the commissioner emphasised.
Since the implementation of VAT Act early this month, the price of a half litre of packeted milk went up from Sh45 to Sh55 and above.
Njiraini said this is illegal according to the Act and called on Kenyans to cooperate with the authority to ensure traders stop exploitation.
He has also emphasised that bread should also not be taxed as it is among the items which were exempted from tax despite being processed products.
“The term “ordinary bread” as used in the Act covers all breads falling under tariff code 1905.90.90 and which are sold for general consumption including white and brown bread but does not include crisp and ginger breads primarily used in the catering industry,” he said.
However, Kenyans are yet to see whether traders will actually adhere to the new Act by not taking advantage and erroneously hiking the prices of goods which should be exempted from VAT.